Euro (EUR/USD, EUR/GBP) Analysis

• Flash PMI data provides unflattering US outlook, Europe improves
• EUR/USD rises after US PMI shock
• EUR/GBP surrenders recent gains
• Elevate your trading skills and gain a competitive edge. Get your hands on the Euro Q2 outlook today for exclusive insights into key market catalysts that should be on every trader's radar:

Flash PMI Data Provides Unflattering US Outlook, Europe Improves

German and EU manufacturing remains depressed but encouraging rises in flash services PMI results suggest improvement in Europe. UK manufacturing slumped well into contraction but also benefitted from another rise on the services front. It was the US that provided the most surprising numbers, witnessing a decline in services PMI and a drop into contractionary territory for manufacturing – weighing on the dollar.

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EUR/USD Rises after US PMI Shock

EUR/ USD responded to lackluster flash PMI data in the US by clawing back recent losses. The euro attempts to surpass the 1.0700 level after recovering from oversold territory around the swing low of 1.0600.

The pair has maintained the longer-term downtrend reflective of the diverging monetary policy stances adopted by the ECB and the Fed. A strong labour market, robust growth and resurgent inflation has forced the Fed to delay its plans to cut interest rates which has strengthened the dollar against G7 currencies. The surprising US PMI data suggests the economy may not be as strong as initially anticipated and some frailties may be creeping in. However, it will take a lot more than one flash data point to reverse the narrative.

If bulls take control from here, 1.07645 becomes the next upside level of interest followed by 1.0800 where the 200 SMA resides. On the downside, 1.06437 and 1.0600 remain support levels of interest if the longer-term trend is to continue.

EUR/USD Daily Chart